In the summer of 2020, the U.S. economy and the European Union could face a tangible recession due to the influence of coronavirus. This writes the Business Insider, citing a statement by JPMorgan.
The Bank said that expectations of how the virus will affect the economy, “has changed dramatically in recent weeks” because of the prevalence of infection (according to who, cases of infection identified in more than 120 countries) and the consequent collapse in the stock market.
According to forecasts by JPMorgan, the US GDP could fall by 2% in the first quarter and 3% in the second, and the economy of the Euro zone – by 1.8 and 3.3% respectively. Economists believe that the current situation could lead to a global recession.
The head of the Department of Economics and Finance of the European Commission Martin Verweij also indicated a greater likelihood of lack of growth in the EU and the Eurozone and noted that potentially “this could be even significantly below zero.” He predicts that with the recession Europe will face this year, and the return to conventional indicators, the European Commission is expected in 2021, writes the Brussels edition of Euobserver.
Experts JPMorgan has revised the growth forecast downwards against the background of restrictive measures that impose governments in the fight against the spread of infection. In particular, their report mentions Italy, which banned the holding of mass events, and also shut down all restaurants, bars and retail stores, excluding grocery and pharmacy. They also cited the example of the United States, which last month banned entry from Europe. In addition, the economic slowdown in the next two quarters will contribute to fluctuations in the financial markets and the decline in share prices.
JPMorgan expects to improve the situation for the coronavirus upturn in the economy should be expected by mid-2020, and in the second half of the year will start the acceleration of growth, the statement quoted by CNBC. The main factor that will prevent a serious blow to the global economy, the Bank considers the measures countries to contain the spread of coronavirus. Authorities, according to JPMorgan, it is necessary to support the most affected sectors, to reduce tension on the financial market and maintain consumer demand through monetary policy.
The world health organization (who) on 11 March announced the situation with the spread of the coronavirus pandemic. According to estimates, the South China Morning Post, 13 March the disease was discovered more than 141 thousand people. Bloomberg predicted that the potential damage from the coronavirus to the economy will amount to $2.7 trillion.